Changes in the dependency ratio provide an indication of potential social support requirements resulting from changes in population age structures.
When fertility levels decline, the dependency ratio initially falls because the proportion of children decreases while the proportion of the population of working age increases.
If fertility levels continue to decline, dependency ratios eventually increase because the proportion of the population of working age starts to decline and the proportion of elderly persons continues to increase.
A high total dependency ratio indicates that the adult population and the overall economy face a greater burden to support and provide social services for youth and elderly persons, who are often economically dependent.
Increases in the elderly dependency ratio put added pressure on governments to fund pensions and healthcare.